Accounting principles and concepts

Multiple choice questions (MCQs) quiz

1. According to accrual concept of accounting, a business transaction is recorded when:

2. John Marketing Company provides advertising services to an investment company in year A but receives advertising fee in year B. John Marketing Company recognizes this revenue in year A. This action of John Marketing Company is justified by:

3. A company is a going concern if:

4. Which accounting concept or principle states that the transactions of a business must be recorded separately from those of its owners or other businesses?

5. The business or economic entity concept is applicable to:

6. Which of the following states that the dollar does not lose its value:

7. Which of the following states that a transaction is not recorded in the books of accounts unless it is measurable in terms of money?

8. Which one of the following states that the life of a business can be divided into equal time periods?

9. The revenue is not recognized until it is earned and realized or at least realizable. To which accounting principle/concept this statement belongs?

10. Sony, a multinational electronics corporation, rounds dollar amounts in its financial statements to the nearest $1,000. Which accounting principle/concept justifies this action?

11. The auditor noticed that the financial statements of Meta Company were missing some footnotes important for users for decision making. This action of the management is a violation of:

12. A fixed asset costing $30,000 is depreciated over its estimated useful life of 15 years. This action is related to:

13. In certain situations, companies might recognize losses but not gains. This action belongs to:

14. Modern Enterprises reported all assets in the balance sheet at current market value. This action is a violation of:

15. Which accounting principle or concept allows accountants to ignore other accounting principles or concepts if the amount in question is immaterial?

16. Which of the following is taken into account while determining the materiality of an amount?